Officials at Sarah's Circle, 4838 N. Sheridan Road, would not comment on the matter Monday. Executive Director Kathy Ragnar was out of the office Monday and an official statement will be released Tuesday, the agency said.

The IRS distributes tax credits annually to states based upon population and the authority has dispensed the credits in Illinois since its inception in 1986, the housing agency said.

Once developers have the credits, they're sold to investors and use the equity to reduce construction and operating costs. The savings are to be passed on to the residents via below-market rate rents, which must remain affordable for 30 years, the agency said.

"Unfortunately, Sarah’s Circle did not score high enough to be awarded credits," said Andrew Field, a spokesman for the development authority. "There were 58 competitive applications for Low Income Housing Tax Credits and the Illinois Housing Development Authority only had enough credits to fund 20 developments."

The state-funded agency's Qualified Action Plan set aside an allocation goal of 14 percent for Chicago, which funded 3 developments this round. The total awarded to Chicago was just over $4 million, he said.

"The sponsors of the development can reapply next funding round. In fact, 19 of the 58 applications IHDA received this round were resubmissions," said Field.

The Sarah's Circle proposal required a zoning change for the two-story building about two blocks south of its current facility. The zoning change allows for a mixed-use residential and commercial property with 38 units of affordable housing, support services and a 50-bed interim housing program.

Ald. James Cappleman (46th) has been a vocal supporter of the project and "will continue to assist them in any way he can to make this project a reality," said Cappleman Chief of Staff Tressa Feher. "We need more permanent supportive housing for the most vulnerable in our community, so Ald. Cappleman will continue to advocate for this project."

The agency hoped to demolish the building at 4654 N. Sheridan Road by spring, Ragner said months ago.

"According to the purchase agreement between Sarah's Circle and the property owner, upon this decision, the property can be re-listed for sale," Truman Square Neighbors said on its Facebook page.